Transcript Chapter 14 - PPT 14 PART 1 Business to

6
CHAPTER
Business-to-Business (B2B)
Marketing
Chapter Objectives
1 Explain each of the
components of the
business-to-business
(B2B) market.
2 Describe the major
approaches to
segmenting B2B
markets.
3 Identify the major
characteristics of the
business market and its
demand.
4 Discuss the decision to 7 Classify organizational
make, lease, or buy.
buying situations.
Describe the major
Explain the buying
5 influences on business 8 center concept.
buying behavior.
Discuss the challenges
Outline the steps in the 9 and strategies for
organizational buying
marketing to
government,
6 process.
institutional, and
international buyers.
CHAPTER 6 Business-to-Business (B2B) Marketing
• Business-to-business (B2B) market is significantly larger than the consumer
market.
• Example: U.S. companies spend more than $300 billion annually just
for office and maintenance supplies.
• Example: Department of Defense budget in a recent year was $500
billion.
• Business-to-business (B2B) marketing Organizational sales and purchases
of goods and services to support production of other products, to facilitate
daily company operations, or for resale.
CHAPTER 6 Business-to-Business (B2B) Marketing
NATURE OF THE BUSINESS MARKET
CHAPTER 6 Business-to-Business (B2B) Marketing
NATURE OF THE BUSINESS MARKET
• Companies also buy services, such as legal, accounting, office-cleaning,
and other services.
• Some firms focus entirely on business markets.
• Example: Caterpillar, which makes construction and mining
equipment.
• Diverse market, everything from a box of paper clips to thousands of parts
for an automobile manufacturer.
CHAPTER 6 Business-to-Business (B2B) Marketing
COMPONENTS OF THE BUSINESS MARKET
• Four main components:
• Commercial market Individuals and firms that acquire products to
support, directly or indirectly, production of other goods and services.
• Largest segment of the business market.
• Trade industries Retailers or wholesalers that purchase products for resale
to others.
• Also called resellers, marketing intermediaries that operate in the trade
sector.
• Government—all domestic levels (federal, state, local) and foreign
governments; also act as sellers—e.g., confiscated goods.
• Public and private institutions, such as hospitals, churches, colleges and
universities, and museums.
CHAPTER 6 Business-to-Business (B2B) Marketing
B2B MARKETS: THE INTERNET CONNECTION
• More than 94 percent of all Internet sales are B2B transactions.
• Opens up foreign markets to sellers.
• Largest segment of the business market.
DIFFERENCES IN FOREIGN BUSINESS MARKETS
• May differ due to variations in regulations and cultural practices.
• Businesses must be willing to adapt to local customs and business practices
and research cultural preferences.
CHAPTER 6 Business-to-Business (B2B) Marketing
SEGMENTING B2B MARKETS
• Segmentation helps marketers develop the most appropriate strategy.
SEGMENTATION BY DEMOGRAPHIC
CHARACTERISTICS
• Grouping by size based on sales revenues or number of employees.
SEGMENTATION BY CUSTOMER TYPE
• Grouping in broad categories, such as by industry.
• Customer-based segmentation Dividing a business-to-business market
into homogeneous groups based on buyers’ product specifications.
CHAPTER 6 Business-to-Business (B2B) Marketing
North American Industry Classification System (NAICS)
• Federal government developed Standard Industrial Classification in 1930s
to subdivide business market into detailed segments.
• Replaced by NAICS with implementation of NAFTA.
• North American Industry Classification System Classification used by
NAFTA countries to categorize the business marketplace into detailed market
segments.
CHAPTER 6 Business-to-Business (B2B) Marketing
SEGMENTATION BY END-USE APPLICATION
• End-use application segmentation Segmenting a business-to-business
market based on how industrial purchasers will use the product.
• Example: A supplier of industrial gases that sells hydrogen to some
companies and carbon dioxide to others.
SEGMENTATION BY PURCHASE CATEGORIES
• Segmenting according to organizational buyer characteristics.
• Example: Whether a company has a designated central purchasing
department or each unit within the company handles its own purchasing.
• Businesses increasingly segment customers according to the stage in their
relationship.
• Example: Whether a customer is new or a long-term partner.
CHAPTER 6 Business-to-Business (B2B) Marketing
CHARACTERISTICS OF THE B2B MARKET
GEOGRAPHIC MARKET CONCENTRATION
• Business market more concentrated than consumer market.
• Example: Companies that sell to the federal government are often
located near Washington, D.C.
• Businesses becoming less geographically concentrated as Internet
technology improves.
SIZES AND NUMBER OF BUYERS
• Business market has smaller number of buyers than consumer market.
• Many buyers are large organizations, such as Boeing, which buys jet
engines.
CHAPTER 6 Business-to-Business (B2B) Marketing
THE PURCHASE DECISION PROCESS
• Sellers must navigate organizational buying processes that often involve
multiple decision makers.
• Purchasing process usually more formal than in consumer market.
• Purchases may require bidding and negotiations.
BUYER-SELLER RELATIONSHIPS
• Often more complex than in consumer market.
• Greater reliance on relationship marketing.
EVALUATING INTERNATIONAL BUSINESS MARKETS
• Business purchasing patterns differ from country to country.
• Global sourcing Purchasing goods and services from suppliers worldwide.
• Can bring significant cost savings but requires adjustments.
CHAPTER 6 Business-to-Business (B2B) Marketing
BUSINESS MARKET DEMAND
• Demand characteristics vary from market to market.
CHAPTER 6 Business-to-Business (B2B) Marketing
DERIVED DEMAND
• The linkage between demand for a company’s output and its purchases of
resources such as machinery, components, supplies, and raw materials.
• Example: Demand for computer microprocessor chips is derived
from demand for personal computers.
• Organizational buyers purchase two types of items:
• Capital items—long-lived business aspects that depreciate.
• Expense items—items consumed within short time periods.
VOLATILE DEMAND
• Derived demand creates volatility.
• Example: Demand for gasoline pumps may be reduced if demand for
gasoline slows.
CHAPTER 6 Business-to-Business (B2B) Marketing
JOINT DEMAND
• Results when the demand for one business product is related to the demand
for another business product used in combination with the first item.
• Example: If lumber supply falls, then decrease in construction will
affect concrete market.
INELASTIC DEMAND
• Demand throughout an industry will not change significantly due to a price
change.
• Example: Construction firms will not necessarily buy more lumber if
prices fall unless overall housing demand also increases.
CHAPTER 6 Business-to-Business (B2B) Marketing
INVENTORY ADJUSTMENTS
• Just-in-time (JIT) inventory policies boost efficiency by cutting inventory
and requiring vendors to deliver inputs as they are needed.
• Often use sole sourcing, buying a firm’s entire stock of a product from just
one supplier.
• Latest inventory trend: JIT II, suppliers to place representatives at the
customer’s facility to work as part of an integrated, on-site customer–supplier
team.
• Inventory adjustments are also vital to wholesalers and retailers.